Brought to you by Scott P. Rogers, Funkhouser Real Estate Group, 540-578-0102, scott@HarrisonburgHousingToday.com
Brought to you by Scott P. Rogers, Funkhouser Real Estate Group, 540-578-0102, scott@HarrisonburgHousingToday.com
Wednesday, October 14, 2026
With mortgage rates now above 7%, I’ve had a few buyers ask me about adjustable rate mortgages lately... and specifically, whether one makes sense if the initial rate is locked in for the first five or seven years.
It's a good question, and as usual, it depends...
How An Adjustable Rate Mortgage Works
With a 5 year or 7 year ARM, your initial interest rate is fixed for the first five or seven years. After that, the rate adjusts periodically based on a market index... it could go up or it could go down.
In exchange for taking on that future uncertainty, you typically get a lower rate up front than you’d get with a 30 year fixed mortgage. For example... instead of a 30 year fixed rate mortgage of 7.25% you might be able to secure an initial adjustable rate mortgage of 6.5%.
When It Might Make Sense
1. You’re fairly confident you’ll move within that time frame. If you expect to sell in four or five years, a 7 year ARM might never adjust while you own the home.
2. You expect to refinance. If rates come down over the next few years, you might refinance before the fixed period ends. But... that’s a bet on future rates, and nobody knows where rates will be over the coming years.
3. The monthly savings really matter to you right now. A lower payment for the first several years can make a real difference in your budget and can likely get you in a house you might not be able to buy otherwise.
When It Might Not Make Sense
If you plan to stay in this home for ten or fifteen years (or longer), you’ll likely face at least one or two rate adjustments... and they might not go in your favor. An adjustable rate mortgage could still turn out to be a better option if - but only if rates don't increase and/or if you can refinance to a fixed rate mortgage later.
Plenty of buyers think they’ll move in five years, and then they’re still happily living in the same home a decade later. Life has a way of changing our plans. :-)
A Few Questions To Ask Your Lender
1. How much lower is the ARM rate than a 30 year fixed rate right now?
2. How often does the rate adjust after the fixed period ends?
3. What are the caps on how much the rate can rise at each adjustment, and over the life of the loan?
4. What would my payment be in the worst case?
That last question is the most important one. If you anticipate being able to comfortably handle the highest possible payment, given reasonable assumptions about future income levels, an ARM might be a reasonable choice. If that payment would stretch you too thin... a fixed rate is probably the safer path, even at a higher rate.
So... is an ARM a good idea? For some buyers, yes. For others, no. The most important thing is to understand exactly what you’re signing up for.
If you’re thinking about buying in Harrisonburg or Rockingham County and want to talk this through, I’m happy to help, and I can connect you with a few local lenders who can run the numbers for your situation.
It's a good question, and as usual, it depends...
How An Adjustable Rate Mortgage Works
With a 5 year or 7 year ARM, your initial interest rate is fixed for the first five or seven years. After that, the rate adjusts periodically based on a market index... it could go up or it could go down.
In exchange for taking on that future uncertainty, you typically get a lower rate up front than you’d get with a 30 year fixed mortgage. For example... instead of a 30 year fixed rate mortgage of 7.25% you might be able to secure an initial adjustable rate mortgage of 6.5%.
When It Might Make Sense
1. You’re fairly confident you’ll move within that time frame. If you expect to sell in four or five years, a 7 year ARM might never adjust while you own the home.
2. You expect to refinance. If rates come down over the next few years, you might refinance before the fixed period ends. But... that’s a bet on future rates, and nobody knows where rates will be over the coming years.
3. The monthly savings really matter to you right now. A lower payment for the first several years can make a real difference in your budget and can likely get you in a house you might not be able to buy otherwise.
When It Might Not Make Sense
If you plan to stay in this home for ten or fifteen years (or longer), you’ll likely face at least one or two rate adjustments... and they might not go in your favor. An adjustable rate mortgage could still turn out to be a better option if - but only if rates don't increase and/or if you can refinance to a fixed rate mortgage later.
Plenty of buyers think they’ll move in five years, and then they’re still happily living in the same home a decade later. Life has a way of changing our plans. :-)
A Few Questions To Ask Your Lender
1. How much lower is the ARM rate than a 30 year fixed rate right now?
2. How often does the rate adjust after the fixed period ends?
3. What are the caps on how much the rate can rise at each adjustment, and over the life of the loan?
4. What would my payment be in the worst case?
That last question is the most important one. If you anticipate being able to comfortably handle the highest possible payment, given reasonable assumptions about future income levels, an ARM might be a reasonable choice. If that payment would stretch you too thin... a fixed rate is probably the safer path, even at a higher rate.
So... is an ARM a good idea? For some buyers, yes. For others, no. The most important thing is to understand exactly what you’re signing up for.
If you’re thinking about buying in Harrisonburg or Rockingham County and want to talk this through, I’m happy to help, and I can connect you with a few local lenders who can run the numbers for your situation.
